≈ Cash Flow, Growth, Speculation. ≈

Traders,

Monday’s message illustrated a two-step, bottom-up approach to portfolio design. One: Identify which systems you like and know how to make money with. Two: Based on your risk tolerance and investment objectives, decide how much capital goes into each system. 

Here’s another way to tackle portfolio design using a top-down approach. 

Fundamentally, all trading systems and strategies fall into three categories: cash flow, growth, and speculation. 

Cash flow

Cash flow strategies are options-based and offer positive theta. They generally carry a higher probability of profit and focus on time decay to deliver some or all of your pay-day. Because of the higher theta associated with short-term options, these tend to be trades that last less than two months.

Growth

Growth strategies involve buying shares of stock or other assets that you believe will appreciate over time. This might include precious metals, real estate, or even cryptocurrencies. Some forms of growth investing are more aggressive than others, but you’re generally looking to hold onto these assets for a long time. 

Speculation

Speculation strategies are usually short-term in nature and involve directional or delta strategies. The probability of profit is lower than cash flow systems, but you can still churn out earnings with the proper skill set. 

#TeamTackle

🛑 Upcoming Webinar › Portfolio Design for Beginners: How to Design your Trading & Investing Portfolio | Dec 20th at 8:30 PM EST

Join Tackle Trading in this upcoming Trading For Beginners webinar on the basics of Portfolio Design and Delta Weighting for traders and investors alike.

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Video of the Day: Gino’s Gems: How to use the Advance/Decline Indicator $ADD on Thinkorswim (TOS)

Coach Gino explains how to use the Advance/Decline Indicator $ADD on Thinkorswim (TOS) in this Gino’s Gem clip.

Chart of the Day: Portfolio Design Top-Down

Here’s an easy schematic to use when thinking through your portfolio design.

Today’s line up

Tales of a Technician: Handling a Losing Stock Investment

What do you do when a long-term stock position bites the dust? This is the question I want to explore today. It’s a dilemma that every trader faces. And it’s incredibly difficult to answer in the heat of the moment. Thus, as with all trade management questions, it’s one best addressed BEFORE the trial arrives.

Traders Lounge 11 PM EST

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Halftime Report 12:30 PM EST

The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day, and fun in a way that only Matt and Tim can deliver.

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